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1. What is the yield to maturity (discount rate) on a government bond being issued today with a $1,000 face value, $30 coupon, 5yr maturity,
1. What is the yield to maturity (discount rate) on a government bond being issued today with a $1,000 face value, $30 coupon, 5yr maturity, and being priced today at $923?
The yield of maturity is 4.77.
2. Governments issue zero coupon bonds which are exactly as they sound: the coupon is $0. Using the discount rate you calculated in Q1, what is the issue price of this zero coupon bond? Like in Q1, this bond is being issued today, 5yr maturity, and $1,000 face value.
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